TVS Motor reports decline of 47% in profit befiore tax for Q4FY20

Two-wheeler major TVS Motor on Thursday reported a decline of 47.13 per cent in profit before tax at Rs 114.83 crore for the quarter ended March 31, 2020, as compared to Rs 217.19 crore during the same quarter last year, the period during which the company saw the transition of products from BS IV to BS VI and its retail sales impacted for the last few days due to the Covid-19 lockdown. The company's total income stood at Rs 4,128.67 crore during Q4FY20 compared to Rs 4,967.03 crore during the same quarter last year, marking a decline of 16.9 per cent.

The company said that it had successfully transitioned to BS-VI and almost 85 per cent of the vehicles it despatched during the quarter were BS VI products. The operating earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter ended March 2020, prior to a one time additional dealer discount of Rs 22 crore and an exceptional item of Rs 32 crore towards Covid-19 came in at 7.6 per cent against 7 per cent reported in corresponding quarter of the previous year.

The company is cautiously optmisitic about the second half of the current fiscal year, with the rural market slowly opening up and expected to see a higher penetration of financing.

The overall two-wheeler and three-wheeler sales including exports registered 633,000 units in the quarter as against 907,000 units registered in the quarter ended March 2019. Motorcycle sales registered a 25 per cent decline to 280, 000 units from 375,000 units during the same quarter last year. Scooter sales declined by 38.37 per cent to 167,000 units against the sales of 271,000 units in the fourth quarter of 2018-19.

The company’s total export of two-wheelers and three-wheelers stood at 204,000 units in the quarter under review as against 196,000 units in the quarter ended March 2019, registering a growth of 4.2 per cent. TVS Motor is also optimistic about the growth in the international market during the second half of the financial year.

During the year ended March 31, 2020, through sustainable cost reduction, the company improved operating EBITDA margins from 7.9 per cent to 8.3 per cent before accounting for one time costs for dealer discounts and Covid-19 relief work. It also started the transition from BS-IV to BS-VI in Q3 of financial year 2019-20. This effective planning helped the company ensure complete readiness of BS-VI vehicle supply in Q4. The company, including its dealers, almost entirely retailed all BS-IV vehicles before March 31, 2020, it said.

Since March 23, 2020, the company's manufacturing facilities have been closed in line with lockdown guidelines issued by the government. This caused an interruption in production and sales during this period. Post easing of the lockdown, the company has commenced its operations, with exhaustive safety measures to safeguard the health of the employees across all its factories in Hosur, Mysuru and Nalagarh. Many dealers of the company across the country and overseas have also resumed operations.

For the full year ended March 31, 2020, the profit before tax declined 20.1 per cent to Rs 865.42 crore, as compared to Rs 1082.85 crore during the last fiscal. The total income declined 6.36 per cent to Rs 18,901.14 crore during the financial year, compared to Rs 20,185.43 crore in the year ago period.